U.S. exporters, jobs stand to lose out with clock ticking on critical Export-Import Bank
Feb. 21, 2012
Here's world trade boiled down in the simplest terms: exporter has product, importer needs product. Importer buys product, exporter sells products. Repeat.
If only it were that easy. As anyone in international trade knows, there are volumes of rules and regulations to navigate, reams of red tape to negotiate, customs agencies that have to be on the same page, supply chains that have to be secured, production and manufacturing delays that have to be overcome and shipping challenges that have to be met.
But at the heart of trade is a relationship between buyer and seller. And it's often the ability to secure credit and financing that makes that link between the two possible in the first place.
In the United States, the Export-Import Bank has played an important role in opening the world market to U.S. products by providing financing in transactions where commercial lenders have shied away because of political or commercial risks that were inherent in a deal. The Ex-Im bank can provide insurance for a U.S. company to guard against possible non-payment by a foreign buyer – something most private sector lenders are hesitant to do, especially in the case of small businesses – or it can provide export credit insurance to a the bank lending to a foreign buyer.
Siemens Energy's plant in North Carolina last month was able to secure the export of gas turbines for an electric company project in Saudi Arabia because of a $638 million direct loan from the Ex-Im. The loan supports over 800 highly skilled U.S. jobs and means American products win out over competition from Japan, Korea and Germany.
The Ex-Im Bank is an American success story. In fiscal year 2011, the Ex-Im supported more than $40 billion in U.S. exports that helped to create or sustain 290,000 U.S. jobs at more than 3,600 companies.
We're not talking about just the Fortune 500. More than 80 percent of the Ex-Im's transactions support U.S. small businesses. And these are not blank checks leaving the U.S. bank account. The Ex-Im's revenues are routed back to the U.S. Treasury, returning $3.4 billion above the cost of the bank's operations back to U.S. coffers since 2006.
But the story could be coming to an end, severely hampering U.S. exporters' ability to compete on the global playing field.
The Ex-Im Bank's charter will expire on May 31, 2012. If the Bank is not reauthorized prior to May 31, critical support to thousands of U.S. exporters and their suppliers across the country will be at risk. There seems to be way forward, though, if Congress starts paying attention. The House Financial Services Committee and the Senate Banking Committees have reached a deal to reauthorize the Bank for four years and cap its authorized loan guarantee authority at $135 billion — $5 billion below the Obama Administration's request.
Make no mistake: other countries are watching with glee Congress' foot-dragging, knowing that their own export credit agencies are ready to step in and fill the void that will be left by the Ex-Im.
Oversees customers looking to buy the jewels of American manufacturing – our heavy equipment, our aircraft, our advanced machinery – aren't able to simply swipe their Visa card when the price tag is in the millions or billions. Credit is needed, and it's not always available at the local bank.
President Obama's goal of doubling U.S. exports over a five-year period is one we can all get behind. But failure to reauthorize the Export-Import Bank will deal a severe blow to reaching that goal and will kill U.S. jobs. With a skittish electorate poised to step into the ballot box in November, Congress risks pulling the plug on the Ex-Im at its own peril.
Nelson Balido is the president of the Border Trade Alliance